Campuses Challenged by On-Line University

Higher education via on-line services is growing and may force the nation's universities to make painful changes

P> Nat Kannan wants to woo 1 million students to his on-line universities by 2000 -- even if he bankrupts some traditional colleges and eliminates much of the variety in the nation's higher education system.

"This market is winner-take-all," said Kannan, chief executive officer of University Online Inc., based in Falls Church, Va.

And he means that in the broadest possible sense. He is one of many advocates of on-line education aiming to toss aside the current managers atop the Ivory Tower -- from the presidents and administrators of two-year colleges to the deans and provosts of the nation's universities. They promise that virtual classrooms could replace the real thing. Universities could avoid the overhead costs of maintaining an elaborate physical plant. Students could tap the expertise and knowledge of the best and brightest professors from around the globe.

And all this could be done at a fraction of the yearly tuition and room and board costs at most universities.

But critics contend the efforts could drive a stake into the heart of educational diversity, cutting money from less popular courses in traditional educational settings and putting it into more popular courses on-line.

It is in this context that Kannan's brainchild -- albeit a modest beginning -- begins to take on a larger significance.

University Online's education courses are prepared by teachers, universities and various education institutions. For $500,000, Kannan then repackages each course for on-line distribution and use, allowing the educational institutions to offer on-line education to the nation's 7 million full-time students and 7 million evening students.

So far, 2,000 students are using University Online's products as part of courses offered by the Army and the Federal Aviation Administration. The students use the courses to learn about software programming or English at their own pace. The students also take on-line exams, whose results are passed back quickly to the students and teachers.

University Online also has signed up the University of Massachusetts, George Mason University in Fairfax, Va., and George Washington University in Washington, likely generating many new students for its on-line products.

Still, on-line education is only a tiny portion of the nation's education sector. Although the on-line education market will grow in the next few years, there are only 15,000 to 30,000 on-line students attending about 700 on-line courses, estimated Dan Corrigan, author of a new book, "The Internet University -- College Courses by Computer." That compares to an overall matriculation of 14 million post-secondary students.

But some ambitious initiatives are underway. The Western Governors Association has called for the creation of a Western Virtual University. Colorado's Democratic Gov. Roy Romer and Utah's Republican Gov. Mike Leavitt are pushing the initiative to help slow spending on state-supported universities, said James Souby, executive director of the Western Governors Association. The on-line university may attract some of the growing number of students away from the states' traditional universities, reducing the need for university subsidies, he said.

The Western Virtual University is being designed by officials working for the Denver, Colo., association, and the governors will review it in June. The design will link the on-line education networks already being established by universities, commercial colleges, and high-tech companies, such as Novell Inc., Provo, Utah, said Souby.

However, Kannan doubts the Western Virtual University has a future. "In a year, [the governors will] lose the governorships, someone else will come in and ax everything," he said.

Souby disagreed, saying the association would continue to develop the on-line university even if a few of its governors don't get re-elected.

One thing seems sure: The Western Virtual University threatens educational priorities preferred by academics, and instead gives greater priority to political and business preferences, said Dennis Jones, chief of the National Center for Higher Education Management Systems, Boulder, Colo. "We're talking about who is in charge of the heart of the [university] enterprise," he said.

Kannan believes on-line education will transform the nation's higher education system. Smaller colleges will lose customers to on-line education and more prestigious universities, he said.

In this sense, institutions of higher learning may face a challenge familiar to other industries -- the newspaper business, for instance. Given what investment newspapers have made in their physical plants, it is not surprising that many see themselves in the printing and newsprint business. For them, on-line newspapers are a threat. But one might argue that the newspaper's core strength is gathering, editing and distributing news -- in any medium.

So, too, with education; the institutions that see themselves as educators will embrace new media as a new outlet for selling their talents. And some argue that rather than upstarts dominating the new media, established, brand-name institutions in older media will eventually rule. There is some evidence that this is already happening in the on-line news business.

"I don't think the traditional university structure... is in any way threatened," said Corrigan. On-line education will act as a complement to the universities, partly because people will be slow to accept computerized education, and partly because colleges offer a very valuable social environment where students can meet lifelong friends and business partners, he explained.

Jones said that academics fear their replacement by computerized education and are reluctant to share their brand name -- the reputation for quality held by Stanford University for example -- with on-line education efforts. That resistance should help slow the spread of on-line education, he said.

Nevertheless, Kannan pointed out that rising costs at prestigious institutions, such as Harvard University in Cambridge, Mass., will prompt more people to pursue on-line education, especially for career education.

These trends will force universities to compete for customers by specializing in particular areas, such as science or business, he said. That specialization will cut funding for the many boutique courses now offered by universities, such as American Constitutional History. "It is sad really.... We'll be poorer for that," he said.

In the meantime, Kannan's University Online faces competition in the emerging on-line education market. Numerous companies and educational institutions -- including prestigious universities -- offer education over the Internet or cable TV, said Jo Ann Robinson, a deputy director at the Washington-based American Council of Education. The council, which oversees the quality of education material in traditional schools, has approved Kannan's courses, as well as other on-line courses offered by various universities and government organizations, such as the Department of Agriculture and the Army.

One small-scale rival to Kannan is the California College for Health Sciences, National City, Calif., whose roughly 6,000 students will soon be able to view the college's courses and take their exams via the World Wide Web, said the college's Web master, Erick Sheiderman.

There are also a slew of new companies setting up education and training courses via satellite or on-line services. For example. Visenus Inc., Provo, Utah, plans to offer business training courses via satellite TV. Other high-tech education companies pursuing the corporate training sector -- worth roughly $6 billion in 1994 -- include The Institute for Advanced Technology, Minneapolis, and Academic Systems Corp., Mountain View., Calif.

In response, University Online will sell its 40 on-line courses to one public and one private university in specific geographic areas, giving the schools an advantage over rival universities when trying to attract more out-of-state or part-time students, said Kannan. Part-time students are growing in number, comprising almost 60 percent of George Mason's students, for example, he said.

Also, Kannan is negotiating deals with software and computer companies under which University Online would resell the training courses developed by the companies to help customers use their products. He also markets University Online's courses to companies that want to improve the education of their workforce.

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